The Indonesian Economy showed gradual improvement, notably with a rebound in optimism and an expansionary PMI of 53.3 (prev: 51.2) and a moderate inflation backdrop of 2.7% YoY. Trade balance and Foreign Reserves remain solid with USD 2.4bn of trade surplus and a rebound in FX reserves of USD 150bn.

Bank Indonesia decided to hold the BI Rate at 4.75% on the back of its posture in keeping FX stability. This is on the back of ongoing recovery in the credit market with loan growth of 7.74% in November 2025, well below Bank Indonesia’s target of 10% loan growth. However, Bank Indonesia maintained its pro-growth stance with a pro-market monetary policy with various incentives aimed at improving system liquidity such as incentives for banks to extend loans and loosening reserves policy.

Fiscal realisation continues to improve with a widening YTD fiscal deficit to 2.4% of GDP (vs 1.8% last year). This is on the back of backloaded government spending on 4Q25 for its priority programs and social spending which was accelerated through debottlenecking efforts from the MoF. We expect fiscal spending to boost growth, especially from priority programs and planned cash assistance for the end of 2025.

The various pro-growth measures taken by both the fiscal and monetary sides of the government showed effectiveness. High frequency indicators such as M2 growth, PMI, and retail sales signal a solid recovery in 4Q25, we expect this momentum to carry over to 1H26. Fiscal execution would be the key support for GDP, with an acceleration expected in 1H26. Supportive commodities price, EU-CEPA deal, and ongoing illegal mining crackdown are expected to lower current account deficit and increase export contribution to GDP, which would trigger IDR appreciation. All in all, the following factors would result in a rotational flow into Indonesia as the market is still attractive valuation-wise.

Product Recommendation

 

EQUITY FUND
MITRA A	MITRA invests in majority domestic stocks, with a focus on Big Cap stocks. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
MICB A	MICB primarily invests in stocks included in the LQ45 index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
BALANCED FUND
MIA	MIA invests in Equities, Bonds and Money Market with Medium Term and categorized Medium Risk. Investors bear the risk associated with the equity portfolio.
MISB	MISB invests in Sharia Equities, Sukuk and Money Market Sharia with Medium Term and categorized Medium Risk. Investors bear the risk associated with the equity portfolio.
EQUITY INDEX AND ETF FUND
FTSE ESG A	FTSEESG primarily invests in stocks included in the FTSE Indonesia ESG Index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the equity portfolio.
XMLF	Mandiri ETF LQ45 is an ETF that invests in blue-chip stocks listed in the LQ45 Index. Categorized as a Long-Term investment with high risk. Investors bear the risk associated with the portfolio of these stocks.

 

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For More Information

Contact Mandiri Investasi – (021) 526 3505
Mandiri Investasi Email – [email protected]
Mandiri Investasi Website – www.mandiri-investasi.co.id

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DISCLAIMER

The opinions expressed in the article are for general informational purposes only and are not intended to provide specific advice or recommendations for individuals or specific mutual fund or investment products. It is intended solely to provide education about the financial industry. Views reflected in the content may change at any time without notice. All performance data and investment returns mentioned in this article cannot be used as a basis for calculation to buy or sell a mutual fund. This data is performance records based on historical data and is not a guarantee of future mutual fund performance. Investment through mutual funds carries risks. Investors are required to read and understand the prospectus before deciding to invest through mutual funds.

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